The new head of struggling Chinese content and devices company LeEco promised to restore trust in the cash-strapped company and refocus on its core businesses of smart TVs and media.
According to Bloomberg, local media reported LeEco CEO Liang Jun as saying anything which doesn’t align with these key businesses could be scaled back or sold.
Known as the Netflix of China, LeEco expanded rapidly over the past two years into smartphones and electric cars. In April it abandoned a planned $2 billion acquisition of US consumer electronics maker Vizio due to “regulatory headwinds”, as it fell short of a $100 million revenue goal in the US.
After its aggressive expansion triggered a cash crunch, the company cut jobs and sold some businesses, but Liang insisted more needs to be done.
To raise funds to paid off debt, LeEco announced in January it wouldsell off minority stakes in three of its businesses to Sunac to raise CNY15.04 billion ($2.2 billion). Other Chinese investors will contribute an additional CNY1.8 billion, raising LeEco’s funding to CNY16.8 billion.
New leadership
Jia Yueting, LeEco’s co-founder, resigned as chairman at an extraordinary shareholder meeting in mid-July. After the company’s troubles mounted over the past six months, Jia resigned in late Mayas CEO, but remained the company’s chairman.
Liang said in an interview it would be “crazy” to assume Jia would sever his ties with LeEco completely, but noted new leadership was required because of his weaknesses in management and operations,Bloomberg reported.
In early July a Shanghai court froze the personal assets of Jia and his wife Gan Wei. The court ruling follows the once fast-rising company’s failure to pay interest due on loans taken out to fund its ambitious expansion into smartphones.
Jia acknowledged in November 2016 the company was expanding “too fast” and its capital and resources were not keeping pace. A month later LeEco said it was planning to restructure its business following the suspension of trading of its shares on the Shenzhen Exchange.
